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Competitive bidding process to save CMS billions

Written by: Rebecca Bowden on Thursday, September 7, 2017 Posted in: HME/DME

According to a recent study, Medicare’s competitive bidding process may be an effective mechanism for achieving savings. Estimates from the CMS claim the system will save the federal government $25.7 billion between 2013 and 2022, with prices 35% lower on average when compared to the 2010 Medicare fee schedule. However, researchers also found the bidding process produced prices that aligned with market trends, and similar savings could be obtained through negotiations with providers.

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Before the bidding program was implemented in 2011, Medicare determined payment for products using a fee structure that dated back to the 1980s, when prices were much higher. Researchers caution that the use of these figures in their projections might inflate the savings estimates.

“While these savings are impressive, they reflect savings calculated from prices in the Medicare fee schedule, which were known to be high,” they write in the report, which was published in the August issue of Health Affairs.

After analyzing the market pricing trends of seven types of medical equipment between 2011 and 2014, the researchers found prices obtained by commercial insurers, presumably through negotiations with suppliers, were comparable to those determined by the competitive bidding system. Proponents of the system view the similar pricing as evidence of competitive biddings’ success while opponents believe the market would dictate similar results without competitive bidding.

Some researchers have claimed that the competitive bidding process isn’t sustainable because unsuccessful bidders will leave the market, limiting access for some beneficiaries. Without smaller DME providers, many of which serve rural areas, it will be more difficult for many beneficiaries to gain access to critical medical equipment. The AARP and the Government Accountability Office, among other advocacy groups, say they haven’t seen the process negatively impact access.

Despite the billions of expected savings, changes could still be on the horizon. In 2015, as a member of Congress, HHS Secretary Tom Price introduced legislation that would swap the competitive bidding process for an auction-style system based on market price. There’s speculation that Price, who once described the competitive bidding process as “hardly competitive,” will spearhead efforts for change in his new position.

For now, though, competitive bidding remains in force, and the potential savings is likely to be CMS’s justification for keeping it as long as possible. In the meantime, you can rely on CareTend, the software designed especially for HME/DME providers, to help you navigate the competitive bidding process.

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